Nearly 13 months ago, Vikram Oberoi took over the corner office at EIH (formerly East India Hotels) from his legendary hotelier father PRS Oberoi. Under him and cousin Arjun Oberoi, joint managing director for development, the group has charted out an aggressive growth path for both The Oberoi and Trident brands. Vikram Oberoi, Arjun Oberoi and group president Kapil Chopra talk about the group's future plans in an interview to Divya Sathyanarayanan. Edited excerpts:

Tourism has been one of the main focus areas for the government and a slew of new initiatives were launched in the past year. Do we see any changes on the ground?

VIKRAM OBEROI: We have an incredible country, huge diversity, so much to see and experience. The question is what can we do more to communicate how special and wonderful India is to the rest of the world. Tourists need to experience it or hear about it, which they can from people who have already visited India. But tourist arrivals are not big.

The government can play an important role in promoting India in key source markets. We, and other hotel companies and travel partners, will be more than happy to support that.

Today, tourism is not viewed as an elitist industry because there is a realisation of its enormous potential to generate employment Tourism has been one of the main focus areas for the government and a slew of new initiatives were launched in the past year. Do we see any changes on the ground?

VIKRAM OBEROI: We have an incredible country, huge diversity, so much to see and experience. The question is what can we do more to communicate how special and wonderful India is to the rest of the world. Tourists need to experience it or hear about it, which they can from people who have already visited India. But tourist arrivals are not big. The government can play an important role in promoting India in key source markets. We, and other hotel companies and travel partners, will be more than happy to support that. Today, tourism is not viewed as an elitist industry because there is a realisation of its enormous potential to generate employment.

The Oberoi Group, like most hospitality majors, hasn't been able to get back to the profitability levels of 2008-09. What are the factors affecting profitability and what are you doing to fix it?

KAPIL CHOPRA: If you look at us, the last three years for us have been fantastic and the numbers corroborate that. Our profits doubled three years back, which was the last year of the UPA government. With the right focus and intensity, and by attracting the right kind of guests, we have grown. The overall market, unfortunately, is not growing very fast. The room rates need to increase and we have taken the lead in that. Our success over the last three years has been the ability to drive value for guests, which has led to exponential rise in revenues and profits. From just the increase in average room rate last year, the consolidated hotel division made Rs 69 crore. When you are able to realise more from the ARR (average room rate), then you are able to deliver more value to the financial stakeholders. This directly goes into the bottom line.

Analysts say that three properties — Delhi, Gurgaon and Mumbai — make up for a big part of your profit. Do you see other properties doing better on profitability?

KAPIL CHOPRA: That's not true. Gurgaon is a managed property and doesn't give us a large share of revenue. It contributes less than 3-4% of our total profit. Our real growth has not really come from these markets, but from Oberoi Resorts. To give an example, Oberoi Udaivilas (in Udaipur), an 87-room property, has the same profit as the 250-room Oberoi Mumbai. Leisure, along with cities, is driving growth. Of our entire portfolio, 10 hotels are driving the engine. If it was not, then we could not have taken the risk of renovating The Oberoi, New Delhi. It would have been professional suicide.

Several hotel chains have taken to the asset-light model of growth. Will you follow this strategy or are you open to investing in future projects?

ARJUN OBEROI: Our portfolio is predominantly owned hotels, many of them are joint ventures where we have a majority stake. We have high degree of investment in these assets. Our balance sheet is healthy and there is no doubt that we can invest in future projects as well. But if we are going to expand at a faster rate, we will look at management contracts because that's the best way to leverage our goodwill and brand. Most of our upcoming ventures are going to be asset light. But that's not to say that we won't invest money in one or two projects. There is surplus within the balance sheet, which we will look to invest in certain unique projects.

Are you also open to mid-market brands? ARJUN OBEROI: All segments are important. We need to keep an eye on how the market is developing. But luxury is in our DNA and that reflects in our capability and expertise. That's where our focus has always been. Not to say that we can't do other types of hotels or segments.

Would you consider strategic alternatives to bring in liquidity by divesting your stake in any owned property?

ARJUN OBEROI: We are always open to ideas. It's not that it's never been assessed either. These are discussions that have taken place in the past.

We built a lot of equity and value in these properties. There is also an advantage to owning properties. You can do things quicker and invest in sustaining the brand much more effectively. We have a strong balance sheet, so at the moment we don't need to take cash out. VIKRAM OBEROI: Having said that, our focus is on growth through management contracts.

And when we look at a potential hotel, we look at the location, people we would work with and we take adecision to say that the hotel needs to work in the long run and be profitable.

What are your plans for the next five years?

ARJUN OBEROI: Oberoi Sukhvilas will open in Chandigarh later this year. This is purely a management contract where we are assisting the owner in the design and execution of the project. The Oberoi Al Zorah is a natural beach resort in Ajman, UAE. Again, this is a pure management contract. In the Marrakech (Morocco) hotel, there is some investment from our side. We own 30% stake in the project. But beyond the hotel, there is real estate opportunity in that and there will be villas for sale. We need to open a few more Tridents in India. There will be some Oberoi Resorts as potential locations become more accessible. Beyond that, we are looking at the Middle East.

Casablanca will open in two years' time and that will extend our presence in Morocco. We are showcasing our brand closer to our source market. There is no doubt that we need to be in London, New York and Paris, some of the big centres. But the cost of entry in these markets is very high. So, management contract is the best way forward. We have been close to establishing a presence in London for the last year or two. Perhaps, we will have something to announce in the near future. These are the gateway cities of the world, where the brand needs to now have a presence. Hong Kong, Singapore and China are centres which lend themselves well to our ethos and development strategy. We have eight acres of land near Hebbal Lake in Bengaluru. That would be a mixed-use development with hotel and residences for sale.